As Black Friday kicks off the holiday shopping season, Australians are weighing up bargains while navigating growing financial pressures. From consumer warnings about dodgy deals to calls for tighter regulations on Buy Now Pay Later (BNPL) services, this week’s money news highlights the challenges and opportunities facing households across the nation.

Black Friday: A Day for Deals, but Not All Are Worth It

Australians are predicted to spend an average of $375 this Black Friday, with many using the sales to stock up on essentials and big-ticket items. Commonwealth Bank research reveals that two in five shoppers are delaying their usual purchases to take advantage of the discounts, a sign of the financial strain caused by rising living costs.

While the sales offer a chance to save, consumer group CHOICE warns shoppers to tread carefully. Items like mattresses, fridges, and earbuds from certain brands have been flagged as overpriced or poor quality, even during the sales frenzy.

“We’re seeing people prioritize essential items,” said Rochelle Eldridge, General Manager of Shopping at CBA, “with seven in 10 shoppers planning to buy everyday necessities or larger items they need this weekend.”

New Rules for BNPL on the Horizon

After a decade of operating outside traditional credit laws, BNPL services like Afterpay and Zip could soon face stricter regulation. Consumer advocacy groups are pushing for BNPL to be governed under the Credit Act, requiring these services to meet the same responsible lending standards as credit cards and loans.

Currently, BNPL providers are not obligated to conduct credit checks, making their services attractive to people who may already be struggling financially. CHOICE CEO Alan Kirkland argues that stronger protections are urgently needed.

“As more people use BNPL to pay for essentials, the government must act to ensure these companies play by the same rules as other lenders,” Kirkland said.

Payday Loans: A Risky Solution for Holiday Costs

As Christmas approaches, the temptation to turn to payday loans to cover expenses is rising. NAB research shows that one in 10 Australians experiencing financial hardship took out a payday loan in the last three months.

While these short-term loans are quick and accessible, they often come with high interest rates and hidden fees. NAB’s Head of Customer Vulnerability, Mike Chambers, warns that payday loans can exacerbate financial stress rather than alleviate it.

“Christmas can be financially stressful,” Chambers said, “but people need to be cautious of quick fixes like payday loans, which often create more problems down the line.”

Fuel Costs and a Brief Respite

Transport costs are weighing heavily on household budgets, with the average family spending $381 per week on transportation. In some regions, this represents nearly 15% of household income, according to the Australian Automobile Association.

There’s a silver lining, though: fuel prices are expected to dip just before Christmas as part of the regular six-week pricing cycle. The ACCC advises waiting for this drop to fill up the tank.

Floods Add to Financial Strain

The devastating floods in New South Wales have become Australia’s costliest natural disaster, with $5.5 billion in insurance claims lodged so far. In Forbes, a rural town hit hard by the flooding, residents are grappling with insurance challenges, from denied coverage to non-renewable policies.

Insurance Council of Australia chief Andrew Hall acknowledged the industry’s challenges but called for government action to implement flood levees and other mitigation measures.

“Now is the time to make changes so these communities aren’t left vulnerable in the future,” Hall said.

The Bottom Line

As Australians gear up for the holiday season, the focus is on stretching budgets, avoiding financial pitfalls, and preparing for rising costs. Whether navigating Black Friday deals, exploring BNPL options, or dealing with the aftermath of natural disasters, staying informed and cautious can help households manage their money more effectively.